Mauro Products distributes a single product, a woven basket whose selling price is $22 per unit and whose variable expense is $16 per unit. The company's monthly fixed expense is $14,400
Required:
1. Calculate the company's break-even point in unit sales.
2. Calculate the company's break-even point in dollar sales. (Do not round intermediate calculations.)
3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales? (Do not round intermediate calculations.)
Answer | ||
1 | Break even point (units) | = Fixed cost / Contribution margin per unit |
= 14400 / (22-16) | ||
= 2400 Baskets | ||
2 | Break even sales in dollars | = Fixed cost / Contribution margin ratio |
= 14400 / (6/22) | ||
= $ 52800 | ||
3a. | Break even point (units) | = Fixed cost / Contribution margin per unit |
= 15000 / (22-16) | ||
= 2500 Baskets | ||
3b. | Break even sales in dollars | = Fixed cost / Contribution margin ratio |
= 15000 / (6/22) | ||
= $ 55000 | ||
Mauro Products distributes a single product, a woven basket whose selling price is $22 per unit and whose variable expense is $16 per unit.
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